Question

Wang Co. manufactures and sells a single product that sells for $320 per unit; variable costs are $176 per unit. Annual fixed costs are $927,000. Current sales volume is $4,260,000. Management targets an annual pre-tax income of $1,185,000. Compute the unit sales to earn the target pre-tax net income.

Answer 1

The number of units necessary is 14,667 units

Step-by-step explanation:

Giving the following information:

Wang Co. manufactures and sells a single product that sells for $320 per unit; variable costs are $176 per unit. Annual fixed costs are $927,000.

To determine the number of units to sell and reach an income of $1,185,000, we need to use the break-even point method.

Break-even point in units= (fixed costs + desired income)/ contribution margin per unit

Break-even point in units= (927,000 + 1,185,000) / (320 - 176)

Break-even point in units= 14,667 units